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The world is buying gold at the fastest pace in 60 years.–
This week’s been full of excitement as gold prices flirt with new highs, rate cuts loom on the horizon, the dollar falls lower, and Middle East tensions reach a tentative pause. Although much change is happening on the surface, the economic fundamentals remain unchanged.
Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Founder Eric Sepanek and Sr. Precious Metals Advisor Steve Rand explain gold’s current rally, why the economy is still in dicey territory, and why there’s a limited opportunity to buy gold at these prices.
Analyzing the Gold Rally
Gold prices notched a six-month high this week, pulling silver prices along for the ride. Investors are waiting with bated breath to see if gold will surge past the previous technical high of $2,085. Over the past few weeks, spot gold prices have been confidently testing this resistance, giving precious metals a bullish outlook.
Bank of America1 forecasts a new high for gold, expecting prices to reach $2,400 an ounce on the back of relaxed interest rates. Even if the $2,100 hurdle isn’t overcome in the next few days, it’s only a matter of time before gold prices blow past it. A diverse array of economic and geopolitical factors are set up to boost gold’s value.
What’s Impacting Gold Prices?
Gold’s most recent surge is attributable to a combination of economic and geopolitical factors. The temporary ceasefire between Israel and Hamas is renewing hopes for a quick end to the conflict. The dollar is showing signs of fundamental weakness, hovering near a three-month low2. Plus, global demand for gold remains robust. In fact, gold buying just reached a 60-year high.
Some investors are pointing to the Fed’s anticipated rate cuts as a signal that the economy might be entering recovery mode. However, this myopic focus ignores the other economic indicators that are only worsening. In reality, the entire economy has been limping along since the pandemic without getting completely healthy again.
The Economy’s Fundamental Problems
Anyone can point to singular metrics as evidence of a recovering economy, but the fundamental rot isn’t being addressed. Jamie Dimon, the CEO of J.P. Morgan, spelled it out with refreshing clarity by admitting that the US is addicted to debt. The leader of the world’s largest bank explained how the debt problem causes a sugar high in the economy, which is like “heroin” to consumers.
This dire yet sober perspective is precisely what investors need to hear. The economy’s problems run deep, and it’s far from overcoming the fundamental issue of debt. The national debt is on pace to blast through $34 trillion, and consumer debt jumped to $17.29 trillion in Q3 of 2023. Inflation is still wreaking havoc, which beckons the Fed to raise rates again. Countries are losing interest in US treasuries, underscoring the world’s loss of confidence in the dollar.
The Myth of Endless Money
With debt mounting at the national and consumer level, smart investors are asking an imperative question: Where is all this money coming from? In the wake of the disastrous Modern Monetary Theory (MMT), the Biden administration is still set on pumping more money into the economy.
We’re overloading all the systems the government provides.–
It’s perfectly sane to want to tune out of the news cycle, but the economic situation can’t be ignored. This false assumption of an endless money supply inevitably lowers the value of the US dollar. This has corrosive effects on all Americans’ buying power, savings, investments, and retirement accounts.
Don’t Wait to Buy Gold, Buy Gold and Wait
Central banks – the world’s most well-funded, knowledgeable, and experienced investors – have been buying gold at record rates over the past few years. Savvy investors are following suit, recognizing that the tides are turning heavily against the domestic and global economy and putting their wealth at risk.
With 2024 gold price forecasts and predictions expecting gold to surge to new highs, investors have a limited opportunity to stock up at these prices. Don’t be fooled into thinking gold prices can’t go any higher.
Gold prices may seem high, but things can go a lot higher just like…in the past.–
If you’ve been stockpiling gold already, now is an excellent time to dollar cost average gold to lower your cost basis for greater returns.
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COT Silver Report – December 1, 2023
COT Silver Report – December 1, 2023
Positions as of 28 November, 2023
Silver COT Report
Fri, 12/01/2023 – 15:35
Gold and silver prices Today on 29-11-2023 : Check latest rates in your city | Mint Mint
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The Battle Over $2,000 Per Ounce Gold
The gold bulls have been victorious in recent weeks, finally taking the price of the yellow metal above the $2,000 per ounce level on an ongoing basis. Whether the bulls are able to hold the market above this level going forward is another question. They have done a good job thus far, however, and numerous bullish catalysts may keep the price of gold on the rise in the months ahead. The $2,000 level for gold has been tested before, and it failed rather quickly. This time around, the bulls seem to have more behind them helping to drive the price of the metal higher. They will have a tough time letting go of the metal and seeing it sink back below $2,000 per ounce. Any dips in gold may be met with aggressive buying, therefore, and a test of $2,000 could see substantial buying interest enter the market.
“There’s…demand for precious metals. People are realizing there’s inflation. They understand that precious metals are a way to protect their assets against inflation.”– Sr. Precious Metals Advisor Todd Graf
Fed Signals Caution as Inflation Persists at Lower Levels
No new major headlines have hit the market in recent days. Inflation remains lower than it was previously, yet still very problematic. The Fed has held rates at current levels for a while now, and seems to be suggesting that it is in no hurry to raise them further or begin lowering rates. Of course, what the Fed does or does not do will depend on the data stream a great deal. If inflation starts to accelerate again to the upside, the Fed may have no choice but to continue tightening monetary policy. The central bank does appear to be far closer to the end of its tightening campaign than the beginning, and it may simply decide to maintain rates at current levels for longer than previously thought.
Markets Adapt to Prolonged Low Rates, Gold Bulls Cautiously Optimistic
The markets appear to have accepted and gotten used to the higher for longer scenario. The gold bulls seem fine with rates at current levels as long as the Fed is not planning on much more tightening. If or when the Fed does signal it will begin easing interest rates, look out above. The price of gold could potentially take off on a sharp and steep run higher, possibly well into fresh all-time high territory.
Gold’s Fate Tied to Fed’s Monetary Policy Amid Ongoing Wars
The Fed, inflation and monetary policy are all big factors for the gold market. The two wars currently underway may also play a role in gold’s fortunes in the months ahead. The war in Ukraine between Ukraine and Russia rages on, with little new news to report. There have been discussions about nuclear weapons being used in the battle, however, and that may keep a degree of risk aversion fueling gold higher. The war between Israel and Hamas is also ongoing, although it is currency in a ceasefire state. The ceasefire over the last several days has allowed for the peaceful return of hostages held by both sides. Hopefully, it will act as a stepping stone to a peaceful end to the war. This conflict too, however, could explode into something much bigger if other nations get involved. If Iran were to enter the war, for example, the United States would almost certainly have to become involved as well. With significant firepower already in the region, the U.S, stands by ready to jump in if necessary. This conflict may also fuel some safe-haven buying in gold and keep the price of the metal elevated for the foreseeable future.
👉 Suggested Reading: Central Banks Buying Gold at Record Rates: Why Investors Should Care
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